Gold and silver prices have been witnessing sharp fluctuations, leaving many small investors confused. If prices are swinging so widely, can these metals still be considered safe investments?
The answer lies in understanding their role in a portfolio.
Gold and silver are widely regarded as safe haven assets. During periods of stock market declines, geopolitical tensions, inflation concerns or currency weakness, investors often shift money into bullion. Unlike equities, these metals are not tied to company earnings or corporate performance. They are physical assets with global demand, which makes them useful as a hedge against uncertainty.
At present, global equity markets remain volatile and geopolitical risks, including tensions involving the United States and Iran, are adding to uncertainty. In such an environment, many investors prefer allocating a portion of their funds to bullion as a form of insurance.
In the Indian market, physical gold and silver prices have corrected from recent highs but remain elevated. Twenty-four-carat gold is trading near Rs 15,400 per gram, while twenty-two-carat gold is around Rs 14,130 per gram. Silver prices are close to Rs 2,54,900 per kilogram in major cities.
According to Ponmudi R, CEO of Enrich Money, short-term corrections should not be mistaken for structural weakness. He notes that although global gold prices corrected from highs above $5,500, strong support in the $4,500–$4,700 range indicates continued underlying demand. This suggests buyers are stepping in at lower levels.
On the Multi Commodity Exchange (MCX), gold futures have retreated from record highs near Rs 1,80,000 but are seeing buying interest between Rs 1,45,000 and Rs 1,50,000. A futures contract is an agreement to buy or sell gold at a fixed price on a future date, often used by traders to hedge risk.
Silver, which is typically more volatile than gold, corrected from around Rs 4,20,000 and is currently trading in the Rs 2,30,000–2,50,000 range on MCX. Buying interest between Rs 2,25,000 and Rs 2,35,000 suggests investors are accumulating on dips.
The key point is that safety does not mean prices never fall. Instead, it means the asset tends to preserve value over time when inflation rises, currencies weaken or markets become unstable.
Gold and silver function much like portfolio insurance. Investors hold them not for daily price stability but for protection during economic stress. For small investors, the strategy is not to allocate all funds to bullion, but to maintain a balanced exposure that can cushion volatility in riskier assets.
As long as global uncertainties remain elevated and technical support levels hold, gold and silver are likely to continue fulfilling their primary role — providing stability in uncertain times.
